Unlike limited liability companies or corporations, a joint venture is not a legal entity set forth in the Wisconsin Statues. Rather, a joint venture is a contractual arrangement whereby more than one person or business agrees to operate as a joint venture, normally for a specific common or business purpose and for a specific duration. A joint venture operates by agreement only; the participants do not have to create a separate legal entity as the vehicle for a joint venture, but the participants themselves can be a legal entity such as a limited liability company or corporation.
It is best that a joint venture be established through a written contract between the parties. The joint venture agreement should spell out the contributions made to the venture. Each member in a joint venture contributes property, asset, capital, skill, knowledge or effort for a common business purpose. The agreement should contain a provision regarding the sharing of profit and loss. Additionally, the members share certain elements of the management and control of the joint venture. Axley joint venture attorneys can help you navigate these decisions.
It is most important that the parties in a joint venture share a common expectation regarding the nature and amount of the expected financial and intangible goals and objectives of the joint venture. Assets deployed by each party represent only a portion of their overall resources.
Under the tax law, joint ventures have the same tax treatment as a partnership. In addition, the joint venture does not have the same liability protection as a limited liability company or corporation. Therefore, insurance and allocation of risk are important considerations.
If you’re considering forming a joint venture or discussing other forms of ownership, please contact our experienced joint venture attorneys.